Tesla’s key level after Battery Day disappointment, according to trader

Tesla’s Battery Day was extremely anticipated however was disappointing to many.

Deutsche Bank Research, nonetheless, upgraded Tesla’s stock on Wednesday to a purchase on what it noticed as a major technological lead versus different automakers.

On the opposite hand, Baird named the stock a “bearish fresh pick” on a “lack of upcoming catalysts.”

Then there have been Tesla buyers, who despatched share costs down 10% on Wednesday to $380.26. Tesla’s stock was down 3% in Thursday’s premarket. Shares are nonetheless up practically 356% this yr.

One of the stock’s key attributes is that buyers both find it irresistible or hate it, stated John Petrides, portfolio supervisor within the wealth administration division of Tocqueville Asset Management.

“There’s no one that’s just lukewarm on Tesla,” Petrides instructed CNBC’s “Trading Nation” on Wednesday. “Those that love it think Covid has been the great accelerator for Tesla, not only for environmental reasons, but because all of the traditional manufacturers are now a further step behind in the game. Tesla’s balance sheet is a lot better, and they have first-mover advantage.”

But Petrides stated he and different sellers fear in regards to the stock’s valuation.

“The stock has had a massive run. It’s not cheap by any stretch of the imagination. And at some point in time, the other traditional luxury carmakers, the BMWs and Mercedes of the world, are going to come to market with electric vehicles, and that’s going to add more competition, which is going to force Tesla’s pricing and margins lower,” he stated. “I need a better entry point on the stock.”

Danielle Shay, director of choices at Simpler Trading, stated Wednesday’s decline introduced Tesla nearer to her ultimate entry level.

“I want to buy it for sure,” she stated in the identical “Trading Nation” interview. “I realize the valuation’s high, but honestly, I don’t think it matters when you’re trading options because what has made Tesla so amazing to trade in the options market has just been all the speculation surrounding it.”

While Baird analysts say few upcoming catalysts for the stock, Shay disagreed, pointing to Tesla’s upcoming third-quarter earnings report.

“If you look at the way that Tesla traded last quarter going into that report, that can be a fantastic catalyst for options traders to trade that to the upside, especially after the ‘buy the rumor, sell the news’ action,” Shay stated of Wednesday’s motion. “I’m looking for a spot to get long. If I could get it at 350, that would be great.”

Shay stated her technique can be to promote put credit score spreads and choose up some longer-dated name choices heading into Tesla’s earnings report, which quantities to a bullish wager on the stock climbing forward of the outcomes.

For these merely trying to purchase and maintain, Shay flagged just a few key ranges to watch.

“What I’m looking for is at least 450, and I’d like to see it trade up to the previous high right around 500,” she stated. “If we can get some solid volume and momentum right around that $500 price point, I think it could make 550. But it’s all going to depend on, when we get up to those levels, if we see a little bit too much resistance there or if there’s a lot of good speculation around it. And just because Tesla has been so amazing for speculative traders and momentum traders like myself, for me, I like the pullback here. I think it’s going to be great, I think it’s going to consolidate here, and I think it’s going to give us another opportunity to trade it to the upside.”



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